Danish Georgist Ole Lefmann recently circulated a paper looking at this question from, of course, a Georgist viewpoint. There’s a lot about Georgist theory (I guess Georgists can skip that part) and a lot about Danish history (likewise for Danes, I suppose). Lefmann notes the Danish traditions of political and legal equality, absence of an empire and no “resource curse.” Historically Denmark had a considerable land tax, but in more recent times this has declined to, he says, less than 2% of value. (Not trivial, I say, even 1% is a significant cost to the speculator.)
But Danes pay high taxes, and these are largely taxes on labor, so how can the Danes be happy? The answer, he says, is all taxes reduce rent, so part of any tax on labor is really a tax on rent. And the proceeds are used to provide social services, so Danes are happy.
It would of course be less complicated and much cheaper for the Government and the taxpayers to collect the rent of land directly from the landowners than by collecting the same amount indirectly via many other sources. The major problem in that matter is that so many of the Danish voters have got the idea that they don’t like land-value taxation and prefer many other taxes
I claim no knowledge of the Danish tax system, but I would guess that higher-income folks do pay a somewhat greater percentage of their incomes than lower-income ones, and the former are more likely collecting rent than the latter. If so, then on that basis I would conclude that Denmark is collecting some of the rent. Then we might also assume that, in Denmark, public expenditures are primarily for the benefit of the public. Under those circumstances, I could see high taxes primarily on labor income as an awkward but not entirely ineffective way to aid happiness. It would only look stupid if compared to a more intelligent tax regime elsewhere. Where might that be?
One thought on “Why are Danes happy?”
Thank you, Chuck. Your comments to my article are much appreciated.
The small LVT in Denmark (less than 2% of the market prices of land) is enough to prevent sprawl from marring towns, like can be seen in societies where no LVT is collected.
Re. your headline about privileges.
We have to live with some privileges, and Georgists have to decide what to do about it. In my article on page 11, I propose PUBLIC COLLECTION OF THE PRIVILEGE-PROFITs.